Argument: Hydrogen cars will be economically viable soon, not in decades

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Amory Lovins, CEO of Rocky Mountain Institute. "Twenty Hydrogen Myths". 20 June 2003 - Myth #17. A viable hydrogen transition would take 30–50 years or more to complete, and hardly anything worthwhile could be done sooner than 20 years. Under development since 1991, 3–5η vehicles could, in principle, enter production ramp-up as soon as 2007 with aggressive investment and licensing to manufacturers. Although the press frequently reports very long transition times as inevitable, and many in the auto industry understandably share that view, many experts feel the transition could be rather rapid. Acceleratedscrappage feebates (Myth #16) could turn over most or all of the U.S. car fleet in less than a decade. The handful of hydrogen refueling stations in Japan, Germany, and the United States could grow rapidly: Deutsche Shell has said hydrogen could be dispensed from all its German stations within two years if desired. However long the transition takes —which is matter of choice, not fate — it’s better to start than not to, and we need to start quickly. The stakes are too high to dawdle.

Amory Lovins, CEO of Rocky Mountain Institute. "Twenty Hydrogen Myths". 20 June 2003 - Myth #9. Hydrogen is too expensive to compete with gasoline. Onsite miniature84 reformers made in quantities of hundreds, each supporting a few hundred fuelcell vehicles85 and using natural gas priced at a robust $5.69/GJ or $6/MBTU,86 could deliver hydrogen into cars at ~$2.50/kg; with $3.79/GJ ($4/MBTU) natural gas, at ~$2.14/kg. (Of that, the cost of compression to ~500 bar, 50 kg of onsite storage, and dispensing into the car totals about $0.32/kg. All equipment is assumed to earn a 10%/y real aftertax return.)87 For comparison, in cost per km for rather conventional fuel-cell cars nominally 2.2× as efficient as gasoline cars (both at LHV), U.S. untaxed wholesale gasoline at $0.90/U.S. gallon or $0.24/L is equivalent to $2/kgH2; U.S. taxed retail gasoline at $1.35/U.S. gallon ($0.36/L), to $3/kg H2.88 (U.S. retail gasoline is cheaper than bottled water — which helps explain why many U.S. filling stations make more money selling soft drinks than gasoline.) Making more reformers would cut costs further. Relative prices differ in other countries — Europe and Japan, for example, typically pay more for natural gas— but they also tend to pay even higher gasoline prices, often equivalent to $8/kg H2 or more so miniature reformers should retain their advantage abroad.

That advantage comes largely from avoiding the cost of hydrogen delivery, because miniature reformers use the natural-gas distribution system that’s already been built. BP, Ford, and Accenture, 89 among others, have confirmed that hydrogen from natural gas can compete with gasoline in cost per km. This comparison is robust: hydrogen made in 20- or 180-nominal-car-per-day natural-gas reformers would have remained competitive with retail and wholesale gasoline, respectively, at the actual average prices of U.S. natural gas and gasoline for the past 22 years.90

Splitting water with electricity can seldom make cheaper hydrogen than reforming natural gas unless the electricity is heavily subsidized, bought at very low offpeak prices (usually well under 2¢/kWh)91, or at very small scale (a neighborhood with a few dozen cars); that’s why only a few percent of the world’s hydrogen is now made electrolytically, powered mainly by old hydroelectric dams.92 However, small-scale electrolyzers — now entering the market for demonstration and remote-location use — avoid the cost of hydrogen distribution from remote central plants, and in some circumstances they may compete with the decentralized gas reformers that offer the same advantage. Specifically, mass-produced (~1 million units) miniature electrolyzers, each serving a few to a few dozen cars, could produce hydrogen competitive with taxed U.S. gasoline even using 3¢/kWh offpeak electricity, so household-to-neighborhood scale could become a successful electrolysis niche market if enough units are made.93 Yet such units, even initially using fossil-fueled electricity that might increase net carbon output per car (depending on the power plants’ fuel and efficiency), would be small and temporary enough to create little electrical load or climatic concern before their electricity source was switched to renewable energy technologies.